Free Trade Raises Standards of Living

I find it amazing that there are still people in life who favor trade restrictions and trade wars. If there is anything credible economists agree on, almost 145 years after the publication of Adam Smith’s treatise The Wealth of Nations, it is that free trade is a good thing.

In every trade, both sides benefit. There is a simple reason for that. Each side is giving up something he values less for something he values more. Thus, at the very moment of the trade, both sides have improved their own respective economic condition. The trade has enabled both parties to the trade to raise their own standard of living.

Suppose John has 10 apples and George has 10 oranges. They enter into a trade in which John agrees to give George 9 apples. For his part, George agrees to give John 1 orange.

One’s initial reaction might be: That’s an unfair trade! Poor John is now left with only 1 apple and 1 orange and George has ended up with 9 apples and 9 oranges.

Not so! Both John and George have raised their standard of living with their trade. It does’t matter how many apples or oranges they have each traded as part of their deal. They have both raised their standard of living through the trade. That’s because they both gave up something they valued less for something they valued more.

The corollary to this principle of free trade — that is, trade that is free of governmental interference — is that any governmental restriction on trade interferes with people’s ability to raise their standard of living.

Of course, the most important argument in favor of free trade is the freedom argument: People have a natural, God-given right to buy and sell whatever they want. It’s their property. It’s their liberty. When government wields the power to infringe on the exercise of people’s natural, God-given rights, that is a society in which people are not free.

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education.
He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at
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